Editor’s Note
As traditional retail and hospitality sectors face economic headwinds, this article examines how department stores and hotels are turning to private brands and unique collaborations to differentiate themselves and attract cost-conscious consumers.
Department stores and the hotel industry have each adopted ‘differentiation’ as their survival strategy. They are attempting to open consumers’ wallets, which have been closed due to the prolonged economic downturn, through new sales channels that were previously unavailable, such as cost-effective ‘PB (Private Brand)’ products and unique collaborations.
The PB product craze that swept through large supermarkets and convenience stores has now crossed the threshold into department stores. In the past, the department store industry introduced PB through methods like operating edit shops with brand license businesses or directly imported goods. Currently, they are launching PB products that involve the entire process from product planning, manufacturing, to design.
Shinsegae Department Store recently unveiled its high-end accessory private brand ‘Adir’ on the 16th. This marks the first time a department store has introduced an accessory PB. Its characteristic is that it purchases raw stones directly and reduces costs incurred in the production and distribution process, selling products at prices over 20% lower than other brands.
Previously, Shinsegae Department Store partnered with GMI to launch the shirt PB ‘Vanbru’ in 2013 and launched the cashmere PB ‘Della Lana’ last September. According to Shinsegae Department Store, Vanbru ranked within the top 3 in sales among various brands within the department store, and Della Lana also achieved sales 160% higher than its initial target.
Lotte Department Store launched the cosmetics PB ‘L&Cos’ last June. It introduced summer cosmetics jointly researched with Kolmar Korea and sold them until last fall. Galleria Department Store is introducing PBs in fashion and food, such as ‘Galleria Cashmere’, ‘Gangjin Maekwoo’, and ‘Gomei 494 Organic Sesame Oil/Perilla Oil’.
The department store industry plans to expand its PB product business. A department store industry official stated:
Walkerhill Hotel has partnered with the food company Daesang and will sell two types of sauces, ‘Walkerhill Janghyang Bulgogi Galbi Sauce’ and ‘Walkerhill Banghyang Galbi Sauce’, bearing the Daesang Cheongjeongwon logo in department stores and marts starting from the 27th. Additionally, they are scheduled to be sold at Lotte, Shinsegae, Hyundai, and Galleria department stores, among others. This marks the first unique encounter between the hotel and food industries.
A Walkerhill Hotel official expressed expectations:
The meeting between hotels and department stores is also drawing attention. Five Marriott-affiliated hotels in downtown Seoul recently opened a pop-up store in the food section on the basement level 1 of Lotte Department Store’s main branch. They selected 10 popular menu items sold at each hotel, priced from 3,000 won to 15,000 won, significantly lowering the barrier to entry for hotels.
A hotel official explained: